Early Childhood Care and Education in Australia

Thought leadership
Beyond child care and pre-school
A practical vision for an early

childhood education and care
system in Australia
Discussion paper
August 2010
Contents
1 Background 5
2 What do we want? 7
3 Where are we now? 12
4 What models are available? 20

A practical vision for an early childhood education and care system in Australia
Discussion paper PricewaterhouseCoopers | 3
1 Background
This paper has been prepared as part of a Thought Leadership project facilitated by
PricewaterhouseCoopers. The project aims to develop a practical vision for an integrated early learning
and care system in Australia, bringing together the expertise of early childhood specialists spanning
industry, government and academia.
The first forum, held on Monday 21 June 2010, considered the broader strategic policy environment of
early childhood in Australia, and specific issues facing the delivery of child care and preschool services.
Key outcomes of the first forum were:
Outlining the public imperative for an effective early childhood education and care (ECEC) system
in Australia.
Identification of existing barriers to a world-class ECEC system.
Identification of key design principles for a future system
Development of criteria by which to assess alternative models of an ECEC system.
The second forum, to be held on Wednesday 18 August 2010, will focus on alternative models for the
provision of ECEC services. The objective of this paper is to shape and provoke this discussion.
Twin objectives of an early learning and care system

The public importance of a coherent and effective early learning and care system has been widely
recognised as policymakers respond to two key issues:
new research on the significant impact of children‟s early development on broader social and
economic well-being, and
the substantial growth in female workforce participation in modern Western economies.
Importance of early childhood
The knowledge of children‟s developmental needs has advanced considerably. Research into the
neurobiology of children‟s development has strengthened the arguments in favour of providing high
quality services for children from the earliest age.
This research has demonstrated that the skills and abilities acquired in early childhood are fundamental
to a person‟s success and well-being in later life. A positive early childhood provides personal and
economic benefits to the individual and then to the society as a whole. On the other hand negative
experiences in early childhood fundamentally undermine the building blocks on which later achievement
relies.1
Indeed, there is substantial evidence that early childhood services can provide some children with
opportunities for learning and development which may exceed those available in their families. In these
1
National Scientific Council on the Developing Child (2004b) Children‟s emotional development is built into the architecture of their
brains. Working Paper No. 2. Available online: http://www.developingchild.net/pubs/wp.html.
cases, the provision of early childhood services provides government with an opportunity to break the
cycle of poverty and inequality that begins in early childhood.2
Workforce participation
Australia, like much of the western world, has witnessed a change in the historical model of family
relationships, where women typically gave up paid employment during their young adult years to care for
their young children full time. The reality of Australia‟s modern economic and social context is that
parents will routinely share the care and education of their very young children with professional early
childhood services, just as they rely on the school system to do this for their older children.
By 2006 the workforce participation rate of Australian women aged 18-44 had risen to 70 per cent,
compared to 84 per cent for men of this age group. In 2005 over 50 per cent of women with a child under
the age of 5 were in the workforce – 16.2 per cent of those women were employed full-time and a further
35.5 per cent employed part-time.3
By 2008, half of Australia‟s 3-year old children attended formal child care services; 48 per cent of 2-year
olds and one third (35 per cent) of 1-year olds also attended child care services, and for significant
periods of time. Over half of all children who used child care services did so for 10 hours per week or
more, with an average of 17 hours per week; and 13 per cent used formal care for more than 35 hours
per week.4 The most frequent reasons given for children‟s attendance in formal care are work related
reasons.5
However, this is not without its risks for children. When the need for children‟s services is seen simply as
an initiative to support female workforce participation, there is a risk that “children may be seen as an
obstacle to women‟s work, with child care considered as a necessary evil”.6
2
Organisation for Economic Co-operation and Development (OECD) (2006) „Starting Strong II, Early Childhood Education and Care‟
OECD Publications, Paris.
3
Organisation for Economic Co-operation and Development (OECD) (2006) „Starting Strong II, Early Childhood Education and Care‟
OECD Publications, Paris (page 265).
4
Australian Bureau of Statistics (ABS) (2009) „Childhood Education and Care Australia cat. No.4402.0‟.
5
ABS (2009) „Childhood Education and Care Australia cat. No.4402.0‟.
6
OECD (2006) „Starting Strong II‟ (page 22).
2 What do we want?
The rationale for policy settings and high quality services to support early childhood outcomes are clear
and well-established. They draw on a deep body of scientific and economic evidence, and shared
understandings of the inherent rights, value and agency of all children.
The range of possible government interventions encompassed by this agenda is broad. Among others, it
includes: measures to improve the quality of parenting; maternal and child health services; higher
intensity services for at risk children and families; paid parental leave; and tax and transfer
arrangements.
However a key plank of this agenda will be to establish a universal system of early learning and care,
based on the following.
We need early childhood services to support the labour force participation of parents, and in
particular of mothers.
We need early childhood services to support the developmental needs of children.
We need early childhood services and policy settings that support the full range of needs of all
parents and children, regardless of employment circumstances - “a spectrum of support to
reconcile work and family life”.
Design principles
In the first forum, the participants outlined eight principles to guide the development of an early learning
and care system in Australia.
Early learning and care system – Design Principles
1 The child is central.
2 Parent is the first and most important carers and educators.
3 The quality of child services is paramount.
4 The system should be integrated with other family policies and services.
5 The system should be transparent, accountable and efficient.
6 Child services should be affordable, accessible and responsive.
7 Child services should be connected to the community.
The child is central
Children occupy a unique position in society, being recognised as individuals and persons in their own
right, yet being wholly or largely reliant on the care and provisions of others – in particular their parents
and families. In addition, children are recognised as human beings with their own rights, they often
cannot, or are not invited to, express their needs and preferences in matters that impact them.
In designing systems for children it is essential that their needs are paramount. In relation to ECEC, this
is not always the case. While ultimately children are the primary clients of our service systems,
sometimes the focus has shifted away from children to the needs of others, including their parents. For
example, Australia child care system is essentially built around the work-related needs of parents rather
than the developmental needs of children.
Australian governments have long recognised the public obligation to serve the best interests of
Australia‟s children and the urgency of ensuring their well being and development. An ECEC system
should recognise these imperatives and focus primarily on the needs and best interests of the child.
Parents are the first and most important carers and educators
Regardless of what services we design, parents are and will remain the primary educators of their
children. Early childhood services need to be designed to recognise this fundamental principle and to
ensure that parents have the opportunity for substantial engagement with their children and are well-
connected with the early childhood professionals who are caring for them when they are not in the care
of their parents.
The UK Effective Provision of Preschool Education Study showed that the types of interaction's parents
have with their children have a much greater impact on children's learning than even high-quality
preschool education.
Melhuish and his colleagues7 found that parents who read to their preschool children, played with
numbers, painted and drew pictures, taught numbers and letters and sang songs with their children had
a significant impact on their children's literacy and numeracy measured at age 5 and again at age 7. This
difference was not only significant; it also persisted into primary school years.
This research and others has indicated that it is what parents do with children, rather than their
socioeconomic status, that is most important for their children‟s development. These basic parenting
skills can all be learnt; they are not inherent in well off families.
Nonetheless, this powerful impact of families on children's development has often been demonstrated by
the difference between advantaged and disadvantaged families.
One key study (Feinstein 2003) has shown that the socioeconomic status of the family is closely linked
to children‟s achievement between the ages of 2 years and 10 years, regardless of the child‟s actual
level of performance at age 2.8
Feinstein reviewed children‟s cognitive achievement at regular intervals over the 8 years covered in this
study. Children from high socioeconomic status families maintained their good performance at age 2
years, or improved on their low performance at that age. Children from low socio-economic families
maintained the low performance at 2 years of age or saw their relatively good performance at age 2
diminish by the time they were 10 years old.
At the end of the study, the children's relative performance reflected the socioeconomic status of their
family rather than their skills at age 2. (See Figure 1).
7
Melhuish, E., Sylva, K., Sammons, P., Siraj-Blatchford, I., Taggart, B., and Phan, M. (2008) „Effects of the home learning environment
and preschool centre experience upon literacy and numeracy development in early primary school‟, Journal of Social Issues,
64(1):95-114.
8
Feinstein, L (2003) Inequality in the Early Cognitive Development of British Children in the 1970 Cohort‟, Economica. London School
of Econmics and Politicla Science vol. 70(277) pp 73-97
The quality of child services is paramount
The public debates about whether child care is good or harmful for children often fail to consider the
quality of that care.
There is a long history of international research literature which emphasises that, when parents choose
to share the care and education of their children with the services provided by the society, these services
should be of high quality.
In these studies quality is usually defined in terms of inputs such as the number and qualifications of
staff relative to the number of children they need to care for and the size of the group. Some studies also
include the quality of interactions that staff have with children. The overwhelming conclusion is simple -
that good quality childcare is good for children and that poor quality is not.
Some of the most compelling evidence for the effect of quality of early education on child outcomes
comes from the Effective Provision of Pre-School Education (EPPE) Project. The EPPE project showed
those pre-schools that were led by highly qualified staff and teachers had the greatest impact on
outcomes9 10 11
At age 7, the study found that children who had attended high quality preschools scored higher on
measures of social behavioural and cognitive development. High quality in the educational component of
pre-school contributed to gains in academic achievement, whereas high quality in the „care-oriented‟
component of the preschool contributed to significant gains in social behavioural development.12
9
Sylva, K., Melhuish, E., Sammons, P., Siraj-Blatchford, I., Taggart, B., and Elliot, K. (2003) The Effective Provision of Pre-School
Education (EPPE) Project: Findings from the Pre-School Period. Institute of Education, University of London. Research Brief No:
RBX 15-03.
10
Sylva, K., Siraj-Blatchfod, I., Taggart, B., Sammons, P., Melhuish, E., Elliot, K., and Totsika, V. (2006) „Capturing quality in early
childhood through environmental rating scales‟ Early Childhood Research Quarterly, 21(1): 76-92.
11
Sylva, K., Taggart, B., Siraj-Blatchford, I., Totsika, V., Ereky-Stevens, K., Gildena, R., and Bell, D. (2007) „Curricular quality and day-
to-day learning activities in pre-school‟, International Journal of Early Years Education, 15(1): 49-64.
12
Sylva, K., Melhuish, E., Sammons, P., Siraj-Blatchford, I., Taggart, B., (2008) Final Report from the Primary Phase: Preschool,
School and Family Influences on Children‟s Development during Key Stage 2 (Age 7-11). Institute of Education, University of London.
Research Report No. DCSF-RR061.
Figure 2, also derived from the EPPE study, shows the months of literacy gain for children aged 8 years
who experienced different qualities of preschool education, compared to those children who received no
preschool.
Children who received a low quality preschool education improved by an average of 4.6 months in
literacy compared to those children who receive no preschool. Children who received the highest quality
preschool gained a full 7.8 months of advantage over children who had received no preschool.
These findings make it clear that formal early childhood services can have a significant and lasting
impact on the skills which children need for success at school. They also make it clear that the better
the service, the greater the impact.
The system should be integrated with other family policies and services
Australian families are support by a range of public policies and services, covering maternal and child
health, primary and secondary education, workplace relations and social welfare.
Early childhood learning and care services should provided by a system that integrates seamlessly with
the full range of settings that children experience – to improve the accessibility of all of these services
and promote a collegial approach to service delivery across professions.
In addition, government policy making in relation to early childhood should be complemented by policies
in other spheres that impact on Australian families and children.
The system should be transparent, accountable and efficient
Given its public importance, and the significant public funding committed to the sector, any ECEC
system should provide for the standards of public accountability and transparency expected of modern
governments.
In addition, the ECEC system should be designed to make best use of the sector‟s resources, including
encouraging businesses or other service providers to invest, innovate and minimise costs.
Child services should be affordable, accessible and responsive
The centrality of families brings an imperative that the services provided by the ECEC systems meets
the needs of parents as well as children. In this context, affordability, accessibility and responsiveness
have been identified a vital characteristics of the services.
Affordability has two components: the direct cost to parents, families or primary caregivers and the
absolute cost of providing the services (i.e. including public funding). The increasing cost of child care
has been well documented (see below), with the affordability of child care to parents being maintained
by increasing government subsidies (e.g. Child Care Benefit). Nevertheless, ongoing price inflation
draws into question whether the child care services are providing value for money and the long term
viability of the system in its current form.
Accessibility is also an ongoing concern, particularly in the wake of the ABC Learning collapse. With
families increasingly having two working parents, child care services are increasingly an essential
service.
Finally, ECEC services should respond to the changing preferences and priorities of Australian families,
particularly in relation to operating times and locations.
Child services should be connected to the community
Childhood development does not occur in a vacuum. Child services need to be cognisant of and
engaged with the broader community in which a child is raised.
On the one hand, this presents challenges to an early learning and care system; for example, how best
to engage parents, families and the broader community in the learning and care services provided. At
the same time, community connectedness offers important opportunities for the sector, such as
engaging with the corporate social responsibility practices of businesses.
3 Where are we now?
Early childhood education and care in Australia is delivered through two separate but parallel systems –
the Commonwealth funded child care system and the state funded preschool system. This approach
reflects the historical development in Australia of two services: “child care”, to assist parents‟ workforce
participation and “preschool” education for children‟s developmental purposes prior to school.13
This divide has blurred in recent years. On the one hand, it is clear that preschool services offer a care-
type service to parents that enables, amongst other things, increased opportunity to participate in the
workforce. On the other hand, child care services are increasingly offering approved preschool
programs, broadening their services to include what is rightfully considered „education‟.
Nevertheless, the divide‟s legacy continues in the design of the two systems. Child care and preschool
education services are delivered by two parallel but separate systems, with a different mix of private,
public and not for profit providers, different funding structures, quality assurance and regulatory
frameworks and planning and policy responsibilities.
The „care‟ and „education‟ divide

Prior to the 1970s, early childhood care and education was the province of the States. State
governments provided (either directly or through non-profit organisations) access to preschool and
regulated the licensing of child care centres.
Commonwealth involvement in early childhood education and care began with the Child Care Act 1972,
which introduced Commonwealth funding to the child care sector. Initially provided only to non-profit
organisations, this funding was extended to private providers in the early 1990s. Child care services are
now predominately funded by the Commonwealth, through the Child Care Benefit and Child Care Tax
Rebate.
The introduction of the Child Care Act embodied and extenuated the divide between “education” and
“care” services, with the two developing into separate parallel systems. Education (preschools and
kindergartens) remains policy domain of the states, with administrative responsibilities typically shared
between multiple portfolio departments (e.g. education, community services, health). In Victoria, South
Australia and Tasmania however the State‟s education department is sole responsible for the child care
system. The States either directly provide the services (through government run preschools) or provide
operational and capital funding to those provided by the non government sector.
Policy responsibilities in relation to child care are split. As noted, funding is primarily provided by the
Commonwealth. The Federal Government also funds the National Childcare Accreditation Council,
which administer quality assurance systems for child care services. On the other hand, State and
Territory Governments continue to administer the licensing and regulatory framework in which child care
services operate, including issuing licences and setting and monitoring performance standards.
In recent years the divide between child care and education has blurred. On the one hand, the
importance of early childhood to a child‟s development has become increasing clear, compelling policy
makers to ensure a child‟s developmental needs are met by the “child care” system. This is reflected in
the Australian Government‟s National Quality Agenda, under which all children‟s services (child care and
preschool) will come under a single quality framework.
13
“Child care” and “preschool” are placed in inverted commas in this section to reflect that they are constructed concepts or
understandings of ECEC services. Whilst the distinction is useful in this context, it is by no means appropriate or inevitable to
separate them as such. See, for example, Moss (2006) „Farewell to childcare?‟, National Institute Economic Review.
At the same time, “child care” providers have begun to provide approved “preschool” services. Parents
are increasingly choosing to retain their children in child care prior to attending primary school, owing in
part to the longer operating hours and cheaper costs of these services relative to preschools.
Accordingly, in 2006 48 per cent of long day care services offered access to a preschool program.14
Early learning and care in Australia today

Despite the blurring of this divide, its legacy remains in the nature of service providers. Preschool
education is still primarily provided by government or by not-for-profit, community-based organisations.
Child care on the other hand has generally not been provided by government agencies but is dominated
by the private sector.
Child care
Child care in Australia, broadly defined, includes services typically provided for children below school
age (family day care, long day care and occasional care),15 as well as those provided to school aged
children (outside school hours (OSH) and vacation care). Over 870,000 Australian children use formal
child care services of some kind, with more than 600,000 under the age of six (i.e. below compulsory
school age). The majority of these children are in long day care, which accounts for 61 per cent of all
children in formal child care, or family day care (12 per cent).16
While child care services in Australia have long been provided under a „mixed market‟ approach, with
both public and private (for-profit and not-for-profit) providers, over the past two decades a clear shift
towards a „market based‟ approach has been observed. In 1991, community-based organisations
accounted for the majority (39,500 or 52 per cent) of the 76,300 long day care places in Australia. This
was supported by Commonwealth Government policies that favoured non-profit providers, including
operational subsidies and fee assistance for users. In 1991 however, the Commonwealth Government
extended fee assistance to users of privately provided services. Following this change and other similar
policy decisions (such as the removal of operational subsidies in 1996) the make-up of the child care
industry changed dramatically.17 By 2004, while the number of places provided by community-based
organisations had increased by 65 per cent, they now represented just 28 per cent of the market, which
had swollen to almost 230,000 places. Private providers had assumed over 70 per cent of the market
(164,343 places).18
Today, from a national perspective, child care services are primarily provided by the private market.
Privately managed centres account for 75 per cent of child care services. Importantly, the mix of public,
private and not-for-profit ownership differs from state to state (see table below).
14
Australian Institute of Health and Welfare (2010) „Australia‟s Welfare‟ (page 47).
15
Family day care refers to child care services provided in the home of the caregiver. Long day care refers to services provided by a
dedicated child care centre, typically for up to 11 hours per day. Occasional care refers to child
16
Australian Government Office of Early Childhood Education and Care (April 2010), State of Child Care in Australia (page 3).
17
For more information, see Brennan, D (2007), „The ABC of Child Care Politics‟, Australian Journal of Social Issues (Vol. 42 No. 2
Winter 2007: page 215).
18
Brennan, D (2007), „The ABC of Child Care Politics‟, Australian Journal of Social Issues (Vol. 42 No. 2 Winter 2007: page 216).
19
Child care services in Australia by ownership structure (percentage)
Ownership structure (%) NSW Vic Qld WA SA Tas ACT NT
Community / non-profit 27.2 33.6 34.7 19.4 34.3 50.5 79.4 68.4
Private 70.1 53.9 62.5 77.3 42.3 34.7 20.6 31.6
Government 2.6 12.6 2.8 3.3 23.4 14.8 - -
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
For the most part, the child care sector is characterised by a large number of relatively small
organisations. They are more than 5,700 long day care services nationally (and almost 400 family day
care services), catering for an average of 86 children.20 The majority of businesses had annual turnover
of less than $200,000 (55 per cent), including 40 per cent of businesses with less than $50,000.
Similarly, most businesses employed fewer than 20 staff (78 per cent), with less than 1 per cent
employing more than 200. 21 While some child care „chains‟ do exist, they tend to be localised
companies, owning no more than three to four centres.22
The key exception to the above was ABC Learning, prior to its collapse in 2008. At the beginning of 2008
ABC Learning controlled almost 1,200 centres in Australia and New Zealand, 23 providing care to more
than 100,000 children and representing some 20 per cent of the long day care market in Australia.24 It
also operated over 1,000 centres in the United States and had other international operations in Hong
Kong, Indonesia and the Philippines. In the 2007 financial year ABC generated more than $140 million in
operating profits globally,25 making it the largest publically listed child care company in the world.26
In November 2008 the company was placed in receivership after it was unable to finance its high levels
of debt in the context of the Global Financial Crisis. Liquidators now oversee the ongoing operation of
former ABC centres and are seeking potential buyers. In response to ABC‟s collapse, GoodStart Limited,
a non-government formed by Social Ventures Australia, Mission Australia, Brotherhood of St Laurence
and the Benevolent Society, acquired over 670 centres formerly operated by ABC. The acquisition
makes GoodStart the largest child care provider in Australia, operating nearly 12 per cent of long day
care facilities, and raises the share of services controlled by community-based organisations to
34 per cent. With the exception of ABC/GoodStart, there are no other large businesses in the sector.
19
Productivity Commission (2010) „Report on Government Services‟
20
Office of Early Childhood Education and Care (2006) „2006 Australian Government Census of Child Care Services (page 11).
21
ABS (2007) „8165.0 Counts of Australian Business‟. This publication includes outside school hours care but excludes preschools. It
also excludes charitable organisations.
22
IBISWorld (2010) „Industry Report O8710: Child Care Services in Australia‟ (page 20).
23
24
Office of Early Childhood Education and Care (2006) „2006 Australian Government Census of Child Care Services (page 11).
25
26
Brennan, D (2007), „The ABC of Child Care Politics‟, Australian Journal of Social Issues (Vol. 42 No. 2 Winter 2007: page 218).
Preschool
Preschool remains very popular in Australia. At present, most children in Australia (82 per cent)
participate in preschool education programs before starting school.27
Preschools in Australia remain predominately public or non-profit institutions (see table below). In the
east coast states (Vic, NSW and QLD), the non-profit sector is the dominant provider of preschools,
while in other states (WA, SA and Tasmania) and the territories preschools are mostly government-run.
Private „for-profit‟ organisations make up only a minority of services in most states.
28
Preschools in Australia by ownership structure (percentage)
Ownership structure NSW Vic Qld WA SA Tas ACT NT
Community / non-profit 79.8 73.8 90.4 n/a 4.5 n/a 13.0 n/a
Private 9.3 7.8 2.5 n/a n/a 25.8 n/a 3.4
Government 10.9 18.3 7.1 100.0 95.5 74.2 87.0 96.6
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
While preschool education was established to promote the developmental needs of children, it is clear
that it also provides a „care‟ service to parents. Accordingly, preschool attendance appears to also be
driven, in part, by parents‟ workforce participation. In couple families where both parents worked (either
full time or part time) participation in preschool education is notably higher (76 per cent and 79 per cent)
than in families where one or both parents are not employed (68 per cent and 57 per cent).
In recent years, child care services have begun to complete with preschools by expanding their services
to offer accredited preschool programs. This change marks a shift in the historical nature of child care
services, and represents a blurring of the divide between education and care services. By 2006, almost
half of all long day care services offered access to a preschool program.29
A key advantage of child care services in the eyes of working families, relative to preschools, is their
extended operating hours. The vast majority of services (93 per cent) open for 10 hours or more each
day, making them more suitable to the needs of families with two employed parents. By contrast,
preschools typically offer only half day services or times that mimic school hours. For these reasons,
today more than 40 per cent of children who usually attend preschool programs do so in child care
services.30
The competition of child care services is reflected in preschool enrolments. While preschool remains
very popular, enrolments at preschools have declined over recent years, having fallen by 17 per cent
since 2004-05. The number of preschools has also fallen from more than 5,300 in 2004-05 to 4,600 in
2009-10.31
27
ABS (2010) „Childhood Education and Care‟.
28
Productivity Commission (2010) „Report on Government Services‟.
29
Australian Institute of Health and Welfare (2010) „Australia‟s Welfare‟ (page 47).
30
ABS (2010) „Childhood Education and Care‟. Please note that some children attend both preschool and a preschool program at long
day care.
31
IBISWorld (2010).
The current state of preschool and child care services
Many commentators have voiced concerns that the current ECEC sector, in particular the child care
market, is not delivering affordable, accessible, high quality services required by Australian families. In
particular, cited concerns include:
sharp increases in the price of child care services, with families only receiving affordable services
due to an increasing cost burden on government
lack of access to child care places, particularly in regional areas, and for infant and additional-
needs places, and
the quality of developmental and learning opportunities afforded by many child care services,
including the qualifications and competence of staff.
Affordability
In order to improve the affordability of child care, and to encourage primary carers to return to work, the
Commonwealth Government subsidises child care services in two forms.
Child Care Benefit. Eligible families receive payment for up to 24 hours care, and up to 50 hours of
care if they are engaged in at least 15 hours per week of work, training or study. Payment may be
in the form of a lump sum or paid directly to child care providers. This payment is means tested.
Child Care Rebate. Eligible families who use child care for work, training or study purposes can
receive payment for 50 per cent of their out-of-pocket child care costs.32 Payments are received
quarterly. This payment is not means tested.
This assistance reduces the cost of care to primary carers considerably. In real terms, direct cost to
parents is only slightly higher than those in the 1980s (see figure below).
33
Child care costs in Australia (nominal)
300
250
200
150
100
50
0
Mar-90
Mar-92
Mar-93
Mar-94
Mar-96
Mar-97
Mar-99
Mar-00
Mar-01
Mar-03
Mar-04
Mar-05
Mar-07
Mar-08
Mar-10
Mar-91
Mar-95
Mar-98
Mar-02
Mar-06
Mar-09
Child care costs in Australia CPI
32
The Child Care Rebate increased from 30 per cent to 50 per cent from 1 July 2008.
33
ABS (2010)‟Consumer Price Index – Australia‟ (Table 13).
Nevertheless, the continuous rise in child care costs, while not increasing the direct cost to parents, is
putting an increasing cost burden on government. Commonwealth Government expenditure on the
financial support to families was almost $3.3 billion in 2008-09, up 85 per cent from 2004-05
($1.8 billion).34
A large component of this cost increase appears to be due to the rising cost of child care. In 2004, the
Australian Government provided $2,959 in funding for every child in child care; by 2009 this had
increased $4,545, an increase of more than 50 per cent.35
Accessibility
Lack of child care remains a barrier for some women wishing to work. In 2008 “ Caring for children” was
the most commonly reported main reason for not looking for work or more hours (143,600 people).
Women comprised the majority of this group (89% or 127,800) and 67% of women who gave that
response were in the 30-54 year age group. For 22,700 of these people (16%), the reason for not
seeking additional work was that child care was too expensive.36
The close connection between workforce participation and the cost of child care was outlined in a recent
Commonwealth Treasury paper which concluded that:
“On average, if the gross childcare price increases by 1%:
The employment rate of married mothers with young children would be expected to
decrease by 0.3%; and
The hours worked by unmarried mothers with young children would be expected to
decrease by 0.7%.”37
It appears that the availability of care is not simply a matter of supply and cost but includes issues of
quality as well. A recent Commonwealth Treasury analysis of this notes that:
“Reports [by parents] of problems with availability, quality and cost are highly correlated and all of
the questions appear to have a very common element to them. We take this as evidence that
people respond to these questions on the basis of overall difficulty with obtaining childcare and do
not clearly separate out quality from affordability from availability.”
The paper concludes that:
“Women in areas which have higher average reports of problems with quality, availability and
affordability, work fewer hours and are more likely to work part-time relative to women in areas
with lower average reports of childcare difficulties.”38
Many families still see the need to construct a patchwork of care for their young children, supplementing
the system of formal care with informal arrangements or modified work arrangements.
34
35
36
Australian Bureau of Statistics (2009) - Barriers and Incentives to Labour Force Participation, Australia, Jul 2008 to Jun 2009. Cat
6239.0 Australian Bureau of Statistics Canberra
37
Gong, X., Breunig, R., and King, A. 2010 How responsive is female labour supply the childcare costs - new Australian estimates.
Treasury working paper 2010 - 03
38
Gong, X., and Breunig, R., (2010) Childcare availability, quality and affordability: Are local problems related to maternal labour
supply?. Treasury working paper 2010 – 02.
Overall, 38 per cent of children aged 0-4 use informal care, involving relatives and neighbours in their
child care arrangements; and as in the case of formal care, work related reasons are the most common
reasons given for informal care.
In a recent ABS survey both couple and one parent families reported that care provided by grandparents
was an important part of their child care arrangements (20 per cent and 17 per cent of children
respectively).
Where extended families cannot help, parents are modifying their work patterns to enable them to care
for their children. These include flexible working hours, permanent part-time work, shiftwork, work from
home and job sharing arrangements. Of all families with at least one parent employed, 61 per cent
indicated that at least one parent normally used one of these work arrangements to help them care for
their children.
The state/territory preschool systems cannot fill these gaps as they usually only provide for 4 year old
children, for limited periods (10-12 hours per week) in structured sessions which are not flexible enough
for working families. In addition it is rare for these services to provide additional hours of child care for
parents who might need this, either because the buildings do not allow for extended hours or the
services do not meet the Commonwealth child care funding requirement of operating for at least 40
hours per week for 48 weeks per year.
Quality
The OECD noted that some studies and research have shown a link between a higher proportion of
qualified and experienced primary contact staff and a higher quality service.39 Nationally, 63 per cent of
primary contact staff at child care services had formal qualifications (being a Certificate III or above), with
a further 15 per cent having three years or more experience (see table below). The proportion of
qualified staff however differs markedly between states/territories, being as high as 70 per cent in
Queensland.
„Formal qualification‟ in this context includes Certificate III (Diploma), Certificate IV (Advanced Diploma)
and bachelor‟s degrees (or above). Only 16.2 per cent of workers with formal qualifications (10 per cent
of all workers) held a bachelor‟s degree, while 42.1 per cent and 41.8 per cent held Certificate III and
Certificate IV respectively. Of the bachelor‟s degree qualifications obtained, 78.1 per cent were in the
field of early childhood education.
Less data is available relating to the qualifications of preschool staff. The table below outlines the
proportion of staff with formal qualifications. In many cases the relevant regulations specify a minimum
number of qualified staff that must be present at each preschool session. The relatively low proportion of
qualified workers may reflect the number of aides assisting qualified staff.
39
OECD (2006) „Starting Strong II‟.
40
Primary contact staff in preschools by qualification/experience (2008/09)
41
NSW Vic Qld WA SA Tas ACT NT Aust
With formal qualification 70.5 46.5 90.3 50.0 56.7 64.9 60.9 62.1 n/a
Without formal qualification 29.5 53.5 9.7 50.0 43.3 35.1 39.1 37.9 n/a
3 years or more experience n/a n/a 2.8 n/a 31.2 n/a 31.2 n/a n/a
Fewer than 3 years experience n/a n/a 4.3 n/a 12.1 n/a 7.9 n/a n/a
Barriers
In assessing the current state of ECEC services in Australia and the broader strategic context, the
Thought Leadership group has identified a number of barriers to a world-class ECEC system. These are
the challenge that must be overcome by any new approaches to ECEC in Australia.
Barriers to a world-class ECEC system
Lack of policy coherence across levels of government and between

portfolio areas
Lack of national vision, charter
Fragmentation of services
Lack of professional coherence
Disparate funding sources and associated guidelines
Inadequate public funding
Market model not serving some children well
Gaps in access for vulnerable children, who are not supported by

structures and funding models
No agreed way forward
– No uniform perception of a problem
– No sense of urgency/importance
ECEC spending currently considered a cost, not an investment.
Funding arrangements can be a barrier to collaboration
40
41
Figures relate to 2007/08 year as 2008/09 figures are unavailable.
4 What models are available?
4.1 Designing an Australian ECEC system
The long term challenge for Australian governments is to design a system of family and child support
that meets the full range of needs of all families, regardless of their employment circumstances. While
ECEC services are only one part of this agenda, it is clear that a strong ECEC system will form a critical
component of a comprehensive approach to family and child support.
This chapter therefore focuses on the design of an ECEC system that provides quality, accessibility,
responsiveness and efficiency. It adopts the OECD definition of ECEC as “all arrangements providing
care and education of children under compulsory school age”.
The mixed market
Debates over ECEC system design often set market driven approaches against state driven
approaches. Market driven approaches tend to be characterised by demand side subsidies; the
presence of private, for-profit providers; and market-led patterns of planning and investment. State
driven approaches are characterised by supply side public funding; the presence of publically owned
providers; and government-led service planning.
These debates over the application of market mechanisms to human services are common to a wide
range of sectors, including school education, tertiary education, healthcare services, aged care,
community services and employment services. To a large extent, they have been overlaid with polarised
and ideologically-driven debates around the competing roles of governments and markets.
More recently however, public provision and market mechanisms have increasingly become viewed
simply as alternative instruments within the policy maker‟s implementation toolkit. Governments
increasingly seek to balance the respective strengths of implementation through government, networks
and markets, tailoring solutions to fit the specific conditions and circumstances of the sector in question.
As discussed in Chapter 3, Australia‟s current approach to ECEC services is relatively skewed towards
implementation through markets. Australia has a mixed market for ECEC services that includes child
care and preschool sectors made up of private for profit, not for profit and government providers.
In some ways, this approach has served its purpose effectively. The market-led approach to expansion
of childcare that began with the extension of public subsidies to for-profit providers in 1991 facilitated a
dramatic increase in the number of child care places, helping martial private investment to meet
increasing demand.
Clearly however, Australia‟s ECEC arrangements are no longer fit for purpose. Understandings of child
development have changed such that the balance of focus between child development and work
participation objectives among child care providers is no longer appropriate. Conversely, the sessional
nature of preschool services in the year before school does not sufficiently meet the needs of many
families.
Criteria for a new system
At its first meeting, the Thought Leadership group identified a set of criteria for an effective Australian
ECEC system. The potential system models discussed in this section should be assessed on their
ability to meet these criteria.
Criteria for an Early Childhood Education and Care System
Vulnerable children are accessing services
Staff engage in effective professional development
ECEC services are well-integrated with other services and policy settings
The system is financially sustainable
Staff are appropriately qualified
All services deliver sufficient quality
Parents are engaged
Supply matches demand, both in the mix of services delivered and the
overall quantity
Alternative models
In designing a new model for an Australian ECEC system, it is useful to consider international
experience. Jurisdictions around the world have adopted a wide range of approaches for delivering
ECEC services, yielding an important body of evidence about the practical operation of design
components. However, system design also needs to reflect specific contexts. The appropriateness and
effectiveness of a system will vary depending on the broader social, cultural and policy environment.
Therefore, rather than examine alternative whole-system models, this paper considers key design
elements of a potential ECEC system, and alternative approaches that may be taken in respect of each
element (Figure 1). It includes alternatives that are more characteristic of a market-driven approach, as
well as those more common to state-driven approaches.
There are two reasons for this „modular‟ approach. Firstly, considering fully formed models would risk
confusing system design with other factors that contribute towards respective outcomes – such as social
or cultural factors, and other policy settings. Secondly, considering alternatives for each component in
turn helps ensure that the full range of possibilities and combinations is explored, and not constrained by
what has been adopted in existing systems.
Design elements of an early childhood system
Funding and investment model
Providers
Quality and regulation
Planning and strategic management
Level of public investment
Workforce
4.2 Financing and investment model

A financing and investment model is required that provides the optimal level of overall investment in the
system, that distributes public resources equitably and efficiently, and that provides incentives to deliver
the right services.
Demand-side versus supply-side subsidies
An initial consideration in designing this model is whether the government subsidy should be provided
through the demand or supply side. In considering these alternatives, the allocation mechanism should
be distinguished from the amount of overall funding provided (discussed below) and other design
elements. For example, demand-side funding has historically been associated with reduced public
investment overall; however in practice, there is no reason for this to be the case. It is also important to
recognise that both of these funding approaches can be applied in a range of markets – for example,
with either for-profit, not-for-profit or government providers.
Currently, both demand-side and supply-side funding is provided for ECEC services. For child care
services, funding is predominantly demand-side, with CCB and CCR provided to families (or directly to
providers on the basis of families‟ use of services). Supply side funding is provided by the
Commonwealth through its Child Care Service Support Program, by States and Territories through
programs including occasional care, and by local government.
Similarly, government funding for pre-school is also both demand-side and supply-side. For example, in
Victoria, funding is provided to kindergartens on a per capita rate, representing a demand-side model,
while capital funding is also provided on the supply side. In jurisdictions where preschool is part of the
school system, funding is also provided through the supply side.
Demand-side funding is typically associated with a market driven approach to funding allocation. Under
this mechanism, funding is either held by the user of the system or „follows‟ the user. This approach
seeks to capture the benefits associated with choice and competition – encouraging flexibility and
responsiveness among providers, and maximising efficiency. Demand-side funding has been applied in
a wide range of human services markets, including primary healthcare and schools. Most recently,
demand driven funding has been applied to the Victorian VET market, in conjunction with an increase in
overall public funding.
Supply-side funding is generally associated with a government-driven approach. Under this mechanism,
government provides capital or recurrent funding directly to providers, who in turn deliver services at
below market-rate, or at no charge. Supply-side funding is often preferred in markets where consumers
are not well-placed to assess quality, or where choice and competition are ineffective mechanisms for
encouraging quality. In these situations, direct funding may provide governments with better levers to
ensure quality.
There are a number of practical constraints to the benefits of demand-side funding in the ECEC sector.
Firstly, parents are limited in their ability to assess quality. They do not experience the service directly,
and the effects of good or bad quality are not immediate. Secondly, the objectives of parents may not
much public objectives – for example, parents may prioritise flexibility and cost over quality. Given these
barriers, a key consideration is therefore whether mechanisms can be designed to effectively mitigate
these constraints; or whether the cost of these mechanisms would outweigh the efficiency gains
realised.
Q1. Should public funding for ECEC be predominantly demand-

side or supply-side? What is the appropriate mix of demand-
side and supply-side funding?
Funding streams
The experience of service delivery in Australia suggests that single-funder models are preferable to
multiple-funder models. The potential benefits of single-funder models include:
more effective allocation of funding
less complexity and administrative burden for providers
less risk of cost-shifting between different funding sources
Currently, ECEC services are funded by both Commonwealth ($3.0 billion) and State and Territory
Governments ($0.8 billion). A key question in designing future ECEC funding arrangements is how these
existing major funding streams should be organised. Combining Commonwealth and State funding may
help facilitate a more coherent ECEC system.
In addition to the core funding streams, both Commonwealth and State and Territory Governments
currently provide funding for programs to facilitate the participation of children with high needs in ECEC
services. The Commonwealth provides some additional supply-side funding to support providers in
particular locations. Any consolidation of core funding streams such as CCR and CCB could also involve
consideration of roles and responsibilities in relation to funding and management of inclusion support
and local needs.
Reform of these funding arrangements is likely to involve significant practical hurdles. However unlike
other many service delivery systems involving both Commonwealth and State funding, such as health
and school education, there is no Constitutional barrier to be overcome. The potential development of a
National Agreement may provide an opportunity to define the relative responsibilities of Commonwealth
and State/Territory Governments.
Q2. How should CCB, CCR and State-Territory preschool

funding be configured to fund an ECEC system?
Q3. What are the barriers to funding reform?
An entitlement to ECEC services?
In the current child care context, government subsidies are predominantly based around the amount of
service use, income, family circumstances and the costs incurred by families. An alternative approach
would be to construct government subsidies around a defined minimum entitlement for which all children
and families are eligible, building on Australian governments‟ current move towards defining an
entitlement for four-year-olds of 15 hours a week of ECEC. This would be analogous to the entitlement
of all school aged children to school education. The entitlement could be expressed in terms of the
services delivered, or in terms of an amount of funding.
There would be some complications associated with this approach. The needs of children and families
differ significantly with respect to the use of ECEC services. For example, families with one parent not
working are likely to use ECEC services less. The economic implications of this approach would also
need further consideration. One potential risk is that families currently using less ECEC services than the
entitlement would be encouraged to increase their use. This increase would not necessarily reflect the
potential benefits for these children and families.
Notwithstanding these considerations, defining an entitlement could have broader advantages in terms
of building a shared understanding of public obligation in relation to early childhood development and
ECEC services. It could also function as an objective for governments rather than an instrument, with
governments taking a range of measures to ensure that the entitlement could be realised.
Q4. What are the benefits of defining an ‘entitlement’ for ECEC
services?
Q5. How should an entitlement be reflected in funding

arrangements?
Cost containment
The experience of increasing child care prices in the current Australian market suggests that cost
containment should be a key element of a future ECEC system. In this context, cost refers to that
incurred by governments, not simply costs to users.
Clearly, the development of a quality system will significantly increase costs relative to existing pre-
school and child care arrangements. At the same time, as a significant funder of these services,
government has a legitimate interest in encouraging efficient services delivery.
From the mid-1990s, the price of child care has increased at a higher rate than CPI. Since 2002, the cost
of child care to consumers increased by an average of 12 per cent since 2002, relative to an average for
all goods and services of 2.8 per cent.42
The reasons for this rate of increase are not well understood. It may be driven by increasing costs of
provision, although there is little evidence of increased wage costs, which are the principle component of
child care costs. It may also be due to market factors such as continuing under-supply in certain areas
and for specific places. This argument is supported by differences in the rate of price increases between
different locations. Finally, price increases may also reflect opportunistic behaviour from providers,
associated with the introduction of CCB and CCR, and increases in the amounts of these subsidies.
While affordability remains an important barrier to child care, costs to consumers have not increased
significantly throughout the period of price increases.43 This suggests that a significant component of the
cost of these increases has been borne by government. One possibility is that the availability of
government subsidies leads some providers to increase fees.
A clearer understanding of actual costs would facilitate more finely tuned funding mechanisms. An
analogy can be drawn with Commonwealth funding for school education, which is based around a
specified unit of costs of delivering school education - Australian Government School Recurrent Costs
(AGSRC). Funding is then calibrated as a proportion of the AGSRC. A further comparison can be made
to primary healthcare, where the Commonwealth provides funding on the basis of the Medicare Benefits
Schedule (MBS). The MBS also specifies a designated fee for each service, which is linked to actual
cost.
Within the context of a general increase in required investment, and a strong focus on quality,
governments should consider how funding mechanisms can be designed to incentivise efficient delivery
and competitive pricing.
Q6. What options should government consider to contain the

costs of ECEC services?
42
Brennan, D (2009), „A Strategic Assessment of the Children‟s Services Industry‟
43
Davidoff, I (2007), „Evidence on the child care market‟, Commonwealth Treasury
4.3 Providers
The next key design component is the nature of service providers. Options for providers include:
Government direct delivery

Private not-for-profit
Private for-profit
Community managed
Mixed provision
Given the extent to which ECEC services are publically subsidised, this question is essentially one of
contestability of public funding. Should public funding be fully contestable, should it be limited to certain
classes of providers, or should it be used to provide services directly?
One consideration in determining the provider mix is quality. There is international and Australian
evidence that for-profit ECEC providers tend to deliver lower quality services than not-for-profit. This is
generally attributed to information asymmetries in the market for ECEC services – that parents
purchasing childcare have little understanding of what constitutes quality or what actually takes place at
a service. As a result, for-profit providers may have an incentive to devote resources to „signifiers‟ of
quality, while reducing overall costs and quality.
Notwithstanding this, including for-profit providers has a range of potential benefits. For-profit providers
can and do deliver high quality services. They also have strong incentives to deliver services efficiently
and responsively, and to adopt innovative approaches to meeting the needs of system users. For-profit
providers also bring private investment to the delivery of ECEC services, resulting in lower costs to
government.
Contestability of funding also relates to the services that providers must offer to be eligible for public
funding. While ECEC services have previously been differentially classified as „child care‟ or „early
childhood education‟ providers, this view is inconsistent with a contemporary understanding of child
development. There is a strong case that „child care‟ and „early childhood education‟ providers should
eligible for common funding under a new ECEC system. Current ECEC funding draws distinctions
between ECEC providers on the basis of factors such weekly hours of operation that should more
appropriately be subject to the preferences of families using the system.
Finally, the question of provider type is also relevant at the whole-of-industry level. The ABC Learning
collapse demonstrated that corporate consolidation has the potential to create instability and risk for an
ECEC service system. In the event that the system encompasses a mix of for-profit, not-for-profit and
government providers, there may be a role for government in seeking to manage this balance.
Q7. What mix of government, not-for-profit and for-profit

providers should the system include?
Q8. What services should be eligible for public funding?
Q9. If a mixed market is adopted – should government seek

to balance the make-up of the market?
4.4 Quality
Quality is essential to the effectiveness of ECEC services. As such, a robust regulatory framework for
ensuring the quality is central to an effective ECEC system. The design of the framework should reflect
the nature of the market – including the nature of competition, number and type of providers. This means
that the optimal quality framework will differ depending on other key design elements of the system.
The incentives for for-profit providers in relation to reducing costs (discussed above) mean that a more
rigorous approach will be required where for-profit providers play a significant role. In this context,
improving quality may also involve mechanisms to reduce information asymmetries and improve parents‟
ability to assess quality.
It is important to note that putting in place appropriate regulation and quality frameworks is not simply a
matter of design. Implementing these frameworks can also be costly and onerous. The costs associated
with ensuring quality under alternative system models should be considered in assessing models.
Australian Governments are currently implementing the National Quality Framework (NQF), an
integrated regulation and quality improvement framework for all ECEC services. The NQF has a strong
focus on quality improvement, and includes a quality rating system to assist parents in assessing the
quality of a service.
Q10. Are the new standards of the NQF adequate to provide a

service of sufficient quality for children?
Q11. What alternative approaches to quality assurance and

regulation are available?
Q12. Do the costs of implementing an effective regulatory and

quality framework outweigh the benefits of including private
providers in the system?
4.5 Planning and market management

In the current Australian child care market, planning has been largely market-led. Since 2006, nearly all
government supported child care places have been uncapped. While at the aggregate level there is an
over-supply of child care, anecdotal evidence suggests that there is significant under-supply in parts of
the market, including in regional areas, and for infant and high-needs places.
Governments have a range of levers for influencing what services are delivered where. One approach is
to utilise its licensing and regulatory functions to control the number of services and government-funded
places available in a particular location. This would involve some method of determining the need for
services in any given area.
Within a more market-driven approach to planning, there are still a number of ways that governments
can influence planning. Governments may play an active, strategic role in managing the market, working
to ensure the right incentives and information are in place to encourage the desired provision. For
example, additional funding could be provided for high needs children, to reflect the actual costs of
delivering services. On the demand side, this could involve high needs children being allocated a greater
amount of funding or „loading‟. On the supply side, this could involve providing additional funding for
providers delivering services in high cost areas or to higher needs children. This would be similar in
approach to the Commonwealth‟s „Child Care Services Support Program‟, which provides additional
funding for the establishment and operation of child care providers in identified areas of need.
Governments may play a role collecting and analysing data, ensuring that providers have a clearer
understanding of the market and patterns of demand. Governments may also choose to engage in the
market directly, by investing capital, purchasing, or delivering services.
Irrespective of the instruments employed, effective planning of ECEC services should utilise the strong
role of state and local government in local level planning. ECEC services can represent important pieces
of community and social infrastructure. High level, aggregate pictures of supply and demand are unlikely
to provide a useful basis for effective planning.
Q13. Should planning of ECEC services be led by market

mechanisms?
Q14. What mechanisms should government use to influence
planning of ECEC services?
Q15. Which level of government should be involved in
planning?
Q16. How should the system deal with higher costs associated
with higher needs children or children in regional areas?
4.6 Workforce
Delivering a high-quality, widely utilised ECEC system will require a highly skilled, professional early
childhood workforce. There is likely to be a role for government in facilitating supply of appropriately
skilled workers, and in influencing the function of the overall workforce in relation to professionalism,
integration and innovation.
All governments have an interest in improving the supply and quality of the early childhood workforce.
The Commonwealth is currently taking measures to increase supply, including creating additional
university places for appropriate courses. State and Territory Governments undertake a range of
functions, including providing funding to individuals for education, training, professional development and
backfill, and incentivising work and study in the profession. Through COAG, governments are also
developing a National Early Years Workforce Strategy.
One issue within the existing ECEC workforce is the disparity between preschool and child care sectors,
in a range of dimensions including pay, conditions, status and stability. Some of these issues may be
addressed indirectly through the National Quality Framework, which will remove the gap in staff
requirements between child care and preschool.
In developing potential interventions to develop the required workforce, the absence of detailed data is a
significant barrier. The National Workforce Census (currently underway) will help to fill this gap. In
addition, the Productivity Commission will undertake a study of the early childhood workforce
commencing in 2010 and reporting October 2011. This will provide further insight into workforce aspects
including the implications of integrated service delivery, the impact of alternative forms of provision,
potential labour market failures, and career pathways.
Q17. What is the appropriate role for government in creating a
stable, professional ECEC workforce?
Q18. What specific actions should governments undertake?
Q19. What should be the respective roles of different levels of

government?
Q20. What are the gaps and opportunities in existing

approaches, including the National Early Childhood Workforce
Strategy?
4.7 Level of public investment

Finally, the overall level of public funding and investment is crucial to a successful ECEC system.
Irrespective of provider types, funding mechanisms and planning, a system without sufficient investment
will not lead to the desired outcomes.
Australian and international policy approaches reflect a consensus that there is clear public value in
ECEC services. There is also a private value that accrues to the children and families who participate in
ECEC, both through improved outcomes for individual children themselves, and in enabling up parents
to work. This suggests that in general, governments and families should share the costs of ECEC
services, reflecting the shared private and public benefits. However the question of what proportion of
total investment should be made by government is more complex.
One approach to the question of public funding is to benchmark Australia against other jurisdictions.
UNICEF has established a benchmark of 1.0% of GDP as a minimum level of public spending on ECEC
among OECD countries. In 2002-03, Australia‟s spending was around 0.45 per cent of GDP. This
provides broad evidence that the overall level of public funding needs to increase. However, this also
reflects a relatively crude approach to assessing the amount of investment required.
Identifying the appropriate amount of public investment requires first identifying the total cost of a quality
system; and then determining the appropriate sharing of costs between government and families. Both
of these questions engender significant policy questions regarding quality, affordability and cost. They
also include consideration of various trade-offs – for example, between quality and costs – that will
influence not just the level of public funding, but also broader aspects of system design.
Q21. How should the level of public funding be determined?
Q22. What proportion of total costs should be met by

government?
Q23. What contributions should parents and families make to

the costs of ECEC services?
Q24. What trade-offs need to be considered in designing an

Australian ECEC system?

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Thought leadership

Beyond child care and pre-school

A practical vision for an early

3 Where are we now? 12

4 What models are available? 20

Twin objectives of an early learning and care system

Importance of early childhood

Early learning and care system – Design Principles

1 The child is central.

2 Parent is the first and most important carers and educators.

3 The quality of child services is paramount.

5 The system should be transparent, accountable and efficient.

6 Child services should be affordable, accessible and responsive.

7 Child services should be connected to the community.

The child is central

The system should be transparent, accountable and efficient

Child services should be affordable, accessible and responsive

Child services should be connected to the community

The „care‟ and „education‟ divide

Early learning and care in Australia today

Ownership structure (%) NSW Vic Qld WA SA Tas ACT NT

Private 70.1 53.9 62.5 77.3 42.3 34.7 20.6 31.6

Government 2.6 12.6 2.8 3.3 23.4 14.8 - -

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Ownership structure NSW Vic Qld WA SA Tas ACT NT

Private 9.3 7.8 2.5 n/a n/a 25.8 n/a 3.4

Government 10.9 18.3 7.1 100.0 95.5 74.2 87.0 96.6

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Child care costs in Australia CPI

“On average, if the gross childcare price increases by 1%:

The paper concludes that:

Barriers to a world-class ECEC system

Lack of policy coherence across levels of government and between

Lack of national vision, charter

Lack of professional coherence

Disparate funding sources and associated guidelines

Inadequate public funding

Market model not serving some children well

Gaps in access for vulnerable children, who are not supported by

No agreed way forward

– No uniform perception of a problem

ECEC spending currently considered a cost, not an investment.

Funding arrangements can be a barrier to collaboration

The mixed market

Criteria for a new system

Vulnerable children are accessing services

Staff engage in effective professional development

The system is financially sustainable

Staff are appropriately qualified

All services deliver sufficient quality

Parents are engaged

Design elements of an early childhood system

Funding and investment model

Quality and regulation

Planning and strategic management

Level of public investment

4.2 Financing and investment model

Q1. Should public funding for ECEC be predominantly demand-